How many leads will it take to hit next years sales objective?

How many leads will you need to reach next years sales objective? This is a simple question, but one many people do not want to answer. Why? Simple, the answer is "a lot."

You could look at the current year's run rate, then see how many leads came into your sales organization that got you to that number. The danger is that you will include sales to your existing customer base in your calculation. Look at how many new customers you gained, and the number of leads that were generated to get to that number. There will be a stark difference between the two numbers. The other error you need to avoid is the failure to include the churn rate of your customer base, or how many customers did you lose? One more factor to consider: New customers typically don't buy at the run rate of your existing customers in the first year. For the sake of this discussion, we will assume they purchase 1/2 the amount of existing customers.

Let's look at a fictional company and see how these numbers play out.

• Annual sales volume: $100,000,000.
• Number of existing customers: 2000
• Avg. purchase of existing customer: $50,000.
• Churn rate: 15%
• Customers lost: 300
• Avg. purchase of new customer: $25,000
• Number of new customers needed to replace lost revenue 2 x 300=600.
• Sales growth target: 10% or $10,000,000
• Number of new customers need for growth target: 400
• Total of new customers actually needed to achieve 10% growth: 1000

Now, if you need 1000 new customers, how many leads do you have to generate? Assume that you need five hot or warm leads to gain one customer. (I am being generous.) You will need 5,000 hot or warm leads.

A study by the Direct Marketing Association revealed a average response rate of 2.61% for direct marketing programs. Using that number, to generate 5000 leads, you would need 191,600 impressions.

It's just math, right?

You can plug your own company's numbers into these calculations. The important thing is to include all the variables. The biggest issues I have experienced in marketing are an overly optimistic view of the response rate of a marketing campaign and how many of the leads generated will turn into a sale.

You should have all of the data available inside your company. Some of it will take work to figure out. However, you must do this exercise to find out where you are, and what it will take to hit your revenue objectives.

You can't build a sales and marketing plan based on wishes and good intentions. It takes discipline, and more than a little work.